The
Debtor Days KPI is a measurement of the credit activity within the Bodyshop. Its purpose is to inform you of the average number
of days that your customers take to pay you.
Example:
A) Bodyshop Debtors = R126,591 B) Daily Credit Turnover* = R2,943 C) Debtor Days = 43 days (A ÷ B)
Note: In
order to calculate the Bodyshop Daily Turnover, you will need to take
the annualised Bodyshop Turnover sold on credit and divide that figure
by 365 to arrive at a daily sales turnover.
A) Annual Turnover On Credit = R1,074,195 B) Days in 1 year = 365 C) Service Daily Credit Turnover = R2,943 (A ÷ B)
Discussion:
In many cases, customer credit agreements are
for 30 days and all too often these credit terms are not fully
instigated and your money is outstanding for longer periods of time. An increasing problem within this sector of business is the value of Debtors owed by insurance companies. Due to very lean trading margins, it is critical to keep control of this KPI.